Company wins $368M from Apple, immediately files brand-new lawsuit

iPhone 5, iPad mini targeted in VirnetX’s latest patent lawsuit.

Three days ago, Apple was ordered to pay $368.2 million for infringing domain name security and virtual private network patents for its FaceTime service. Now, it turns out the same company that beat Apple in that case—VirnetX—filed a new lawsuit against the iPhone maker on the very same day.

The suit, filed Tuesday in US District Court in Eastern Texas (PDF), repeats the same allegations but updates them to target Apple’s latest products. Those include the iPhone 5, fifth generation iPod Touch, fourth generation iPad, iPad mini, and all Macs using OS X Mountain Lion. FaceTime, iMessage, and Apple's use of VPN On Demand technology are the culprits, VirnetX says. The plaintiff is demanding monetary damages and a permanent injunction preventing Apple from continuing to infringe its patents.

VirnetX says it is building a secure domain name registry based on its patented technology, but makes its money today by licensing patents and filing lawsuits. VirnetX says Apple “refused to pay fair value” for patent licenses, and has also targeted Microsoft, Cisco, Avaya, and Siemens, with a trial against the latter three scheduled for March 2013. The company won a $200 million settlement from Microsoft in 2010; in addition to Microsoft, VirnetX has struck licensing agreements with Aastra, Mitel Networks, and NEC.

The brand-new lawsuit asserts these same patents that Apple has already been found to infringe. Apple is likely to appeal that ruling, but if the company can't get it overturned, Apple may just have to pay the damages or strike a licensing deal of its own with VirnetX.

Promoted Comments

Because I'm still baffled how the jury came to its decision on the last case.

I'm guessing you have never sat on a jury before. Because if you had then you'd know this is not a shocker. I have sat on a few and let me tell you it opened my eyes to how crappy the whole trial by jury thing is. On each jury I sat on I had to fight with other jurors about sticking to the facts and the law and forget about their "gut feeling." Others just wanted to end it quickly and get out of there and were willing to vote any way they felt would make that happen soonest. I remember one case where this kid was being charged with theft even though there wasn't a shred of evidence linking him to the crime. Not even an eye witness. the kid was blamed for simply looking suspicious and being in the area. If I ever find myself standing before a judge as a defendant I would ask that the judge decide the case and not a jury.

I think we need to build a lot more bridges, first to stimulate the economy, second so we'll have a place for all these trolls and hope that they'll stay under the bridges instead of coming out and take our children (or money).

I think we need to build a lot more bridges, first to stimulate the economy, second so we'll have a place for all these trolls and hope that they'll stay under the bridges instead of coming out and take our children (or money).

I'd rather disbar them, give them a shovel and a pickaxe, and have them build said bridge. These people never worked a day in their lives.

Because I'm still baffled how the jury came to its decision on the last case.

I'm guessing you have never sat on a jury before. Because if you had then you'd know this is not a shocker. I have sat on a few and let me tell you it opened my eyes to how crappy the whole trial by jury thing is. On each jury I sat on I had to fight with other jurors about sticking to the facts and the law and forget about their "gut feeling." Others just wanted to end it quickly and get out of there and were willing to vote any way they felt would make that happen soonest. I remember one case where this kid was being charged with theft even though there wasn't a shred of evidence linking him to the crime. Not even an eye witness. the kid was blamed for simply looking suspicious and being in the area. If I ever find myself standing before a judge as a defendant I would ask that the judge decide the case and not a jury.

AFAICT VirnetX is a non-practicing entity? Just makes its money on patents? Say what you will about Apple's lawsuits against Samsung; at least it makes things you can buy and use.

Don't companies like ARM work by licensing the tech rather than making it themselves too. It is a little more complicated than whether or not they make a product on the market.

ARM isn't sitting on years-old or decades-old IP trying wring every last bit of profit out it while slapping themselves on the back boasting about how massively innovative their ideas are to anyone who will listen.

As determined as most lawyers are to see that juries are populated only by credulous fools, I wouldn't be surprised if most Ars readers who've been called for jury duty have found themselves excused.

(You say that you've served on several, so I want to clarify that I'm not calling you a credulous fool. Lawyers don't always do this and when they do, aren't always successful. I'm sure you slipped through. )

Quote:

If I ever find myself standing before a judge as a defendant I would ask that the judge decide the case and not a jury.

Heck yeah. Trial by jury is a right, not a requirement. If the judge seems remotely sane (most are) and I'm innocent, I want a bench trial. If I did it and need emotions to get me out of it or the judge seems kooky or a "convict 'em all and let god sort 'em out" type -- like the sort found getting kickbacks from the private prisons -- then I'll take the jury.

Careful what you wish for when asking for a judge to decide the case vs. a jury. He's just as likely to want to put a quick end to a lengthy trial as the jury is. Having been through this before as a defendant in an expensive patent litigation case, I've seen a judge hand down decisions during a Markman hearing (which is critically important, as it defines the specific meaning of the claim terms used in the patent claims) as exclusively what the plaintiff asked for. Our counsel speculated this was to "encourage" a settlement rather than going through the whole trial. Feh.

Settling with a non-practicing entity ("troll") can be dangerous even though it is likely to be less costly than going to trial an losing. You're funding their war chest to go after others (patent litigation attorneys do want to get paid!). Usually the trolls go attack others, but it seems like they can bite the hand that just fed them, too.

So company X infringe on patents held by company Y in products A, B, C. Company Y sue. However time pass by, so company X can release other products. Now company Y can do 3 things, a) forget about the other devices b) add them to pending litigation IF its early on c) sue company X for another patent infringement.

Also injunctions and damages are given for SPECIFIC devices, however I company that infringe just make cosmetic changes and release same product under new name, injunctions are still in place.

And on 2nd trial company that is infringing usually have hard time proving lack of knowledge about patent in question. (Unless ofc. they can prove that device went to production before they knew about them, but for what ever reason it took so long to bring those devices on market).

This way owner of patents do not have to forget about some infringing devices for the same of finishing pending trails, as he can sue again, and next time he will have easier time proving willful infringing. Of course Company that infringe can constantly modify their devices, however judges will see such tactic as willful, and start giving bigger and bigger fines.

So for this company iPhone5 arrived way too late for incorporation to pending litigation. No loss, they sue again. For second possibility look at recent still not started litigation between Apple and Samsung. They want to include recently released devices to trial (Galaxy SIII and iPhone5), and since its still not too late, than judge probably will grant those wishes.

The trolls pay the judges and juries in East Texas a LOT of money and probably a cut in the award as well. Every patent troll knows you almost never lose in East Texas. Maybe the juries and judges there are so illiterate their eyes just glaze over and they award huge damages just to get the bribes.

AFAICT VirnetX is a non-practicing entity? Just makes its money on patents? Say what you will about Apple's lawsuits against Samsung; at least it makes things you can buy and use.

Don't companies like ARM work by licensing the tech rather than making it themselves too. It is a little more complicated than whether or not they make a product on the market.

A company like ARM develops and proves out chip designs, which they license to manufacturers. Pay their fee and you get a turnkey solution on how to make a particular chip.

Companies like VHC amass vague patents that essentially describe outcomes rather than methods. They then wait for companies like Apple (or Microsoft, or Avaya) to independently devise methods for achieving those solutions at their own cost then litigate after they have implemented those methods into products.

Abscond with one of ARM's designs and you become unjustly enriched - you get a working design without the R&D outlay it would take to develop it yourself. Infringe on VHC's patent(s) after developing the solution indepedently and VHC isn't out a dime, but since they have an exclusive on the outcome they get to license your solution to you.

AFAICT VirnetX is a non-practicing entity? Just makes its money on patents? Say what you will about Apple's lawsuits against Samsung; at least it makes things you can buy and use.

Don't companies like ARM work by licensing the tech rather than making it themselves too. It is a little more complicated than whether or not they make a product on the market.

ARM isn't sitting on years-old or decades-old IP trying wring every last bit of profit out it while slapping themselves on the back boasting about how massively innovative their ideas are to anyone who will listen.

I'm sure ARM does try to wring every last amount of profit. And whether they are congratulating themselves is immaterial.

AFAICT VirnetX is a non-practicing entity? Just makes its money on patents? Say what you will about Apple's lawsuits against Samsung; at least it makes things you can buy and use.

Don't companies like ARM work by licensing the tech rather than making it themselves too. It is a little more complicated than whether or not they make a product on the market.

A company like ARM develops and proves out chip designs, which they license to manufacturers. Pay their fee and you get a turnkey solution on how to make a particular chip.

Companies like VHC amass vague patents that essentially describe outcomes rather than methods. They then wait for companies like Apple (or Microsoft, or Avaya) to independently devise methods for achieving those solutions at their own cost then litigate after they have implemented those methods into products.

Abscond with one of ARM's designs and you become unjustly enriched - you get a working design without the R&D outlay it would take to develop it yourself. Infringe on VHC's patent(s) after developing the solution indepedently and VHC isn't out a dime, but since they have an exclusive on the outcome they get to license your solution to you.

ARM also has a huge patent portfolio that I am sure they would sue you if you utilized any.

AFAICT VirnetX is a non-practicing entity? Just makes its money on patents? Say what you will about Apple's lawsuits against Samsung; at least it makes things you can buy and use.

Don't companies like ARM work by licensing the tech rather than making it themselves too. It is a little more complicated than whether or not they make a product on the market.

ARM isn't sitting on years-old or decades-old IP trying wring every last bit of profit out it while slapping themselves on the back boasting about how massively innovative their ideas are to anyone who will listen.

I'm sure ARM does try to wring every last amount of profit. And whether they are congratulating themselves is immaterial.

Are you going to say that ARM brings the same amount of value to the table as litigant patent holding companies?

Here's the difference: ARM is a vendor who has customers. VirnetX apparently is a plaintiff who has defendants.

If I came up with/invented something and my intentions are to license it to others, should my rights be taken away just because I don't manufacture any product???

Yes. The purpose of patents is to encourage innovation, If you patent an idea and don't produce (or license others to produce) it, you are stifling innovation by preventing anybody else from using that idea, even if they come up with it on their own.

If you've got a great idea and you don't want to make it happen (maybe you're just not the entrepreneurial type) but you don't want to let others benefit from your idea, just keep it to yourself. You're not giving away anything, but you're not stopping anybody else, either.

A lot of people have your your same flawed understanding of laws. Laws exist to serve your society not you]. The reason individual protections exist is because we (the modern world) have learned that each of us can be harmed or abused just as easily as our neighbor. In other words, 'whatever can be done to him/her could just as easily be done to me'.

With patents, there seems to be a lot more instances where some vague patent from an NPE presents a legitimate innovator from releasing their product than instances of an inventor having his/her idea stolen.

AFAICT VirnetX is a non-practicing entity? Just makes its money on patents? Say what you will about Apple's lawsuits against Samsung; at least it makes things you can buy and use.

Don't companies like ARM work by licensing the tech rather than making it themselves too. It is a little more complicated than whether or not they make a product on the market.

A company like ARM develops and proves out chip designs, which they license to manufacturers. Pay their fee and you get a turnkey solution on how to make a particular chip.

Companies like VHC amass vague patents that essentially describe outcomes rather than methods. They then wait for companies like Apple (or Microsoft, or Avaya) to independently devise methods for achieving those solutions at their own cost then litigate after they have implemented those methods into products.

Abscond with one of ARM's designs and you become unjustly enriched - you get a working design without the R&D outlay it would take to develop it yourself. Infringe on VHC's patent(s) after developing the solution indepedently and VHC isn't out a dime, but since they have an exclusive on the outcome they get to license your solution to you.

ARM also has a huge patent portfolio that I am sure they would sue you if you utilized any.

No doubt, but I imagine theirs are more heavily weighted towards working methods they invested time and money developing.

I think the best distinction between a patent troll and somebody like ARM is the way in how they market their patents.

ARM goes about marketing like any manufacturer would, offering their goods (chip designs) to people that are likely to buy/license them. They're requesting license fees before the product is made, and their patents are specific enough that a manufacturer isn't likely to infringe them accidentally.

NPE's, on the other hand, use their patents like a minefield, waiting until after a product is released and announced. They were never contributed to the development of that product in any way, and it's only coincidence that it violates one of an NPE's many vague patents. That's why trolls need such large patent portfolios to survive.

This company invented its technology. And Apple refused to license it. So what choice would this company have but to sue. Its not like Apple doesn't just use patents and worries about licensing later..... Nokia, Samsung, Motorola....

I hate patent trolls, but there has to be a line between troll and small inventors. This company didn't just pop up to sue over this patent. They were developers who started a company around work they did for the government. Now you would think that the work done for SAIC would belong to SAIC or the government, but apparently not. As such, they should get paid for Apple using the technology. Of course, Apple and Microsoft support software patents, so they should be handing over the money gladly.

If I came up with/invented something and my intentions are to license it to others, should my rights be taken away just because I don't manufacture any product???

Yes. The purpose of patents is to encourage innovation, If you patent an idea and don't produce (or license others to produce) it, you are stifling innovation by preventing anybody else from using that idea, even if they come up with it on their own.

If you've got a great idea and you don't want to make it happen (maybe you're just not the entrepreneurial type) but you don't want to let others benefit from your idea, just keep it to yourself. You're not giving away anything, but you're not stopping anybody else, either.

A lot of people have your your same flawed understanding of laws. Laws exist to serve your society not you]. The reason individual protections exist is because we (the modern world) have learned that each of us can be harmed or abused just as easily as our neighbor. In other words, 'whatever can be done to him/her could just as easily be done to me'.

With patents, there seems to be a lot more instances where some vague patent from an NPE presents a legitimate innovator from releasing their product than instances of an inventor having his/her idea stolen.

You need to read my post more carefully, I said with the intention to license.